How Kona Ice, A Mobile Snow-Cone Franchise, Grew To $125 Million In Sales By Appealing To Retirees, Seasonal Employees And Side-Hustlers

When Tony Lamb, founder of Kona Ice, asked Richard Weaver in 2011 why he wanted to operate one of his roving snow-cone truck franchises, Weaver replied that he had grown weary of his career as a collections agent for the mobile-home lending industry. “It was the pits dealing with people who were at the lowest point of their life,” Weaver recalls telling Lamb. “They were usually good people who just ran into hard times. I just wanted to work in a job that created happiness.”

Despite Weaver’s lack of experience in food or franchising, the latter part of his answer appealed to Lamb, who awarded the former repo man with the Central Arkansas territory for Kona Ice. This year’s Kona Konvention, held each February at the corporate headquarters in Florence, Kentucky, welcomed more than 600 individual franchisees, including Weaver as a keynote speaker. At the convention, Lamb likes to highlight how owning a Kona franchise has changed the lives of the retirees, the moms returning to the workforce, the millennials looking for a side hustle. Weaver, Lamb says, “got on stage and told his story, and brought a lot of people to tears.”

Weaver talked about how he had longed to be his own boss. “I’m Joe six-pack and was in my late 40s but had no capital to look into McDonald’s,” he says “The fact that Kona is low-cost gave me the opportunity to be a small entrepreneur.” Now 52, he owns two Kona trucks and an additional Kona trailer. He also doesn’t mind the seasonality of the business, which allows him to “take a breather” between January and March. Selling cups of crushed ice earned him more in May 2018 than he had made in a year as a collections agent.

KonaRichard Weaver

Lamb says the flexibility of franchising a truck paired with his decision to remove the typically competitive nature of franchising from Kona has helped his frozen-treats business to thrive from the Florida panhandle to Alaska. Franchisees are not required to report revenue or give a percentage of sales to corporate. Instead, corporate largely relies on initial fees and fixed royalties from franchisees as well as sales from the dozen or so trucks the Lamb family continues to operate in the Boone County area.

Meet Kona Ice Founder Tony Lamb. His snow cone truck has not yet made our list, but Lamb is building his chain’s success by emphasizing an often overlooked factor: franchisee satisfaction.

With low labor and overhead costs, Lamb says several franchisees rake in more than $1 million in annual sales. “I don’t care. I’m happy for them,” he says. “If they make a tremendous amount of money. I'm not the wisest businessman in the world, I realize that. I was at a convention where a franchisee revealed his gross numbers. I thought, ‘Wow, I really, really did not think that out well.’ But I did, because our franchisee satisfaction is through the roof.”

As of 2017, the company’s corporate headquarters, which employs 40 full-time, pulled in $25 million in revenue. Kona estimates systemwide sales at roughly $165 million based on cup inventory.

Kona Konvention 2018

Creating Kona

Lamb started out as a door-to-door vacuum salesman, which grew into his own business that at one point employed 200 salespeople. He then became a marketing consultant, but a sour experience with an ice cream truck in 2004 changed his path. “A dilapidated ice cream truck was blasting music on our street. It looked like a ’72 Chevy van that was beat to pieces, with blue smoke rolling out of its engine,” said Lamb, a father of four. “It was one of the scariest experiences I’ve had as a parent, to see your kids running to this.”

To make matters worse, Lamb says he spent $22 on freezer-burnt products. It got him thinking: “What if the truck was beautiful, with an open kitchen and driven by a professional? What if the product was delicious and affordable? For weeks, I kept coming back to this idea.”

In 2006, Lamb quit consulting and took out a $500,000 line of equity to start Kona. He hired a graphics designer, an engineer and manufacturer to build his first fleet of five calypso-themed trucks adorned with Kona the penguin, the company mascot who dons a Hawaiian shirt and lei. By summer of 2007, his trucks were serving cold cups of shaved ice called Groovy Grape, “Orange You Happy” and their bestselling Tiger’s Blood (a blend of strawberry and coconut). By the end of that year, he broke even. But in 2008, the recession froze funding for parent-teacher associations, Kona’s top customers.

Kona Ice

PTAs across the state frequently ordered Kona trucks for school events. “We started franchising in 2008, and all of a sudden those calls stopped,” Lamb said. He offered the PTAs a restructured deal: Have the kids pay $2 for each cone and Kona would donate 20% of proceeds to the PTA. He proposed something similar to other organizations in dire straits, including local sports teams, charities, churches and nonprofits throughout the country, allowing Kona to expand throughout the recession. “Franchisees saw that as great marketing,” says Lamb. “and now it’s part of our culture.” To date, he says, the chain has raised more than $40 million for local communities.

The recession was just the first of many forces that could’ve put Kona out of business. Copycats began to spring up, forcing Lamb to patent several flavors as well as truck parts, ice machinery and designs. Then, First Lady Michelle Obama’s national health food campaign would change parents’ and schools’ nutritional expectations for kids’ snacks. Lamb partnered with food scientists to reduce sugar, add vitamins and incorporate real fruits blended with natural cane sugar.

Kona Ice

To continue growing, Lamb is targeting customers beyond the playground. As adorable as Kona the penguin is, the kid-themed trucks weren’t performing well at evening events like rodeos or music festivals. He teamed up with a designer and manufacturer to create Krafted, a truck outfitted with a darker colors and LED party lights, sans cartoon characters. He hired a food scientist to develop grown-up flavors like lavender lemonades, peach sangrias and blackberry mojitos. They’ve also created compact vehicle models like the Kona Mini to fit indoors for office events and conferences. In 2012, corporate events barely made it to Kona’s top ten sources of revenue. As of 2017, Lamb says, corporates ranked third.

Even so, his star-franchisee Weaver says scooping up cool treats for the children of his community remains his favorite part of the job: “To go from dealing everyday with people who were so broke they couldn’t pay their mortgage to seeing 300 kids running across a park and seeing their joy, it’s indescribably rewarding.”